Find the Right Metrics for Your Small Business’ Sales Team

Friday, 1st December 2017

The Sales Team in Small Businesses

The sales team in any small business or company is vital to the success and longevity of any business model centred on growth and success. Harnessing that sales team to grow a small business into medium business is tricky, but with these tips on metrics and management, you should be able to pinpoint areas for improvement and upskilling within your team.

Small business management of Sales Teams

A well-known saying in the small business world is “What gets measured, gets managed”. The problem with this today, is that advances in technology allow managers to measure everything.

When managers therefore try to measure everything, they lose sight of what is really driving their sales. The salespeople become lost among all the metrics and what you are left with is poor management of what really matters to your success.

What you are faced with is choosing which metrics are key to your small business success. Let’s consider the survey results of key performance indicators (KPIs) that are used across over 800 sales teams in this country.

Wins are measured along with closed deals and representative production marked against a quota. Wins are the most commonly used measure and since selling is a true art form, making the target should always be a goal.

Closed deals on the other hand is an outcome rather than a goal and is not useful to the sales team nor manager as an indicator of future outcomes.

Demos, calls, C-suite level meetings and web registrations end up being more instructive forms of indicators. These allow you to use real time feedback rather than relying on past results which the sales team cannot control. Real time data is helpful to determine if the sales reps are using their time in a valuable manner and exerting efforts to improve business. The best indicators will always be within a sales rep's control because this allows them to change their behaviour in order to reach goals.

To get an accurate picture of how to improve sales and identify the KPIs, you need to remove your sales funnel. Typically, the flow of sales activity follows this specific pattern:

A rep starts with prospects, through cold calling, emails and social media connections.

The rep then determines which contacts are interested versus those that are actual prospects and qualified opportunities.

The next step is advancing opportunities by discussing the value of the product or service with the chosen contacts.

Finally, the sale is closed with the final negotiation steps and winning of the business. Most sales teams will follow up with a post-sale service involving order fulfilment, customisation and on-boarding activities.

Using the example of a company that sells menu displays and advertising platforms to restaurants you can see the process in action. This happens to be a very fragmented market and reps are challenged to identify the right closing time because every restaurant will have its own budget. After closing, there is a low marginal cost involved in setting up and maintaining the customer and their new platform. Feeding the funnel works in this scenario to give the reps incentives to encourage them to make their calls.

Driving your sales team

Managers will want to make sure their sales team is focused on the top portion of the funnel and the invested prospects so they don't waste time following the wrong ones. Profits are linked to contract renewals and ancillary services so the wrong leads can waste time and lose money. This example shows a long selling cycle which will require that reps have adequate incentive and the means to manage it efficiently.

An example is with a payroll company; the main sales managers had formerly been sales reps with the best records. In many cases this is their first time managing others so they focus on what they know best, which is simply closing deals. When looking over the sales cycle it can be seen that the most effective time to work with the sales reps is earlier in the funnel. Leading indicators were used to increase new business by 55% and reduce on-boarding time by 50%, leading to more productive sales.

Conducting Sales performance reviews in small businesses

Selling involves behaviour as well as analysis and ensuring that your reps keep their behaviour in tune with the metrics in a smooth flowing process.

When done correctly, performance reviews are a great way to achieve this. Most companies do not utilize reviews enough and when used, managers typically see them as after the fact discussions about achievements and compensation.

Using performance reviews for Training to upskill your Sales team

Reviews can also be used for looking ahead and coaching behaviours; managers need to take care to avoid generalized sermons and use more direct conversations. Clarify the indicators so that salespeople know how and where they need to change behaviours, in order to achieve successful performances.

When general approaches are used by management with statements like “What's closing this month?”, reps only focus on literally the next month and the required on-boarding. What they miss is all the activities in between. This is the very reason that sales can vary so much because you can have a strong month of sales and then periods of prospecting to catch up.

When you get rid of the funnel managers you have more freedom when talking to the sales team. It allows them to point out specific resources and allocate attention to the neglected areas. If one sales person is making a lot of calls you can show them how they need to change priorities and work on different qualification criteria. This will help them generate better prospects to follow because fewer quality prospects, is better than numerous ones that are not likely to close.

When reps are approached in this manner and they can see reports and individuals progress, they are better able to see where they stand, where they want to be and where to focus. Managers can talk to their teams about behaviours as well as intentions. When leading indicators are used along with coaching sales teams can develop more systematic and proactive selling behaviours. The best way to achieve this is with incentives to develop new business contacts and increase contract renewals.

Summary: Taking these tips and applying them to your company

The steps outlined above are luckily within an organizations’ influence as opposed to being part of the uncontrollable external market. Managers need to understand the metrics accurately and which ones’ matter as well as be able to turn this into successful selling behaviour. This will be the definition of truly managing a sales team and their performance. Success will come when you step away from discussing quotas and after-the-fact results and focus on the view ahead and how to reach desired outcomes.